Bid Ask Spread question

[ironchef]

I think it's because the spread is so deep ITM, that's why the spread is huge.

Based on my own experience trading DITM illiquid simple options, when I sold, mostly I was selling intrinsic value with little premium, but when I bought, I had to pay premium. In other words, mid points were not representative.

I only trade spread when I have to leg into it and I usually leg out so I have no experience trading spread as a unit.

 

[spindr0]

Based on my own experience trading DITM illiquid simple options, when I sold, mostly I was selling intrinsic value with little premium, but when I bought, I had to pay premium. In other words, mid points were not representative.

I only trade spread when I have to leg into it and I usually leg out so I have no experience trading spread as a unit.

I have found that fills are more likely nearer the midpoint with spreads. I surmise that there's more inducement to do because they're garnering two spreads instead of one. That experience may just be because I gravitate toward more liquid options or because there has just always been someone available "just waiting for me" as they take the other side, for the past 30+ years

 

[truetype]

I have found that fills are more likely nearer the midpoint with spreads. I surmise that there's more inducement to do because they're garnering two spreads instead of one.

It's because spreads are slower-moving so the mms are taking less risk.